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If you believe as I do the market is made up of emotions then when orders
are placed at the market they will trade at the ask price in most cases.
Savvy or tough buyers will place orders to buy at a price lower than the ask
and not create much upward pressure. When all the stock offered at the ask
is gone the ask moves up and if buying pressure does in fact exist the trade
price moves up also. I believe it. Like to see some for a few months.
Jimmy
-----Original Message-----
From: Wayne Mathews [mailto:wayne@xxxxxxxxx]
Sent: Wednesday, May 24, 2000 7:10 PM
To: =omega list
Subject: Buyers and Sellers (or Bid and Ask)
There is in TS 2K an ActivityBar indicator called Buyers vs Sellers. The
calculation for this compares Best Bid/Ask prices against trade prices
to determine if the trade was at the bid or ask. If the trade was at the
ask it is called a buy and considered as buying pressure (up). If at the
bid it is called a sell and represents selling pressure (down). Thus,
how many "buys" and "sells" per unit time is suppose to indicate overall
buying or selling pressure. But is this correct thinking? (Has anyone
found these ActivityBars of any use?)
My understanding is that one can both buy or sell at either Ask or Bid.
A limit order to buy is placed at the bid (and hopefully filled there).
(It could be at the ask but then why not just place a market order at
ask?). A market order to buy is filled at the ask (nobody is going to
fill it at the bid).
A limit order to sell is entered at the ask. A market order to sell is
entered at the bid.
Unless you know (which we do not) if a trade is a limit order or a
market order, I do not think one can not tell if it is a buy or sell,
even knowing if it when at the bid or ask. And therefore, one can not
tell anything about buying pressure or selling pressure.
Comments?
wayne
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